Shanghai Drafts New Taxi Rules to Allow Self-Driving Cars and Restrict Algorithmic Pricing

Shanghai is proposing a major update to its taxi regulations that would formally support the use of autonomous driving technology in taxi services while placing new restrictions on ride-hailing platforms' pricing practices and treatment of drivers.

The draft Shanghai Taxi Regulations were released for public consultation in late October, marking the first comprehensive overhaul of the city's taxi rules in approximately three decades. The proposed changes aim to modernise the regulatory framework as app-based ride-hailing, electric vehicles and autonomous driving technologies reshape urban transportation.

According to City News Service, the draft encourages the safe and orderly application of autonomous driving technology in the taxi industry. Transport and public security authorities would provide guidance and services to support the development of the sector.

The proposal is significant because it would provide a clearer regulatory basis for the use of self-driving vehicles in commercial passenger transportation. Autonomous driving companies have been testing robotaxi services in several Chinese cities, but the expansion of such services depends on licensing arrangements, safety requirements, operational boundaries and the responsibilities of companies providing the vehicles.

Shanghai's draft also encourages the use of big data, blockchain and artificial intelligence to improve taxi services and industry management. The proposed framework supports the development of new technologies, new-energy vehicles and low-carbon transportation equipment.

One of the most notable provisions concerns pricing practices on digital ride-hailing platforms. The draft would prohibit platforms from using data, algorithms or platform rules to charge different customers different prices for the same service under equivalent transaction conditions.

The provision addresses concerns that some digital platforms may use customer data and algorithmic pricing systems to offer different fares to users based on their individual profiles, travel history or other behavioural information. The proposed rule seeks to improve transparency and prevent unfair price discrimination.

The draft would also require ride-hailing platforms to disclose their commission rates and relevant operating rules. Platforms would be prohibited from imposing unreasonable commissions or improper conditions on drivers.

These provisions could have implications for companies operating major ride-hailing services in China. Platform operators may need to review how fares are calculated, how commissions are presented to drivers and how customer data is used in pricing decisions.

The draft also proposes changes to the management of traditional street-hail taxis and app-based ride-hailing vehicles. Both would be brought under a more integrated regulatory framework, reflecting the fact that the two forms of transportation increasingly compete for passengers in the same urban market.

Under the proposed rules, authorities would retain a role in managing the number of vehicles and allocating operating rights based on service quality and reputation. Street-hail taxi fares would remain subject to government guidance, while ride-hailing prices would mainly be determined by market conditions, with the possibility of government intervention when necessary.

The regulatory changes reflect the growing importance of digital platforms in urban transportation. Ride-hailing applications have transformed how passengers book cars, compare prices and communicate with drivers. However, their expansion has also raised questions about platform power, labour conditions, data privacy and consumer protection.

Autonomous driving introduces another set of regulatory challenges. Companies developing robotaxi services must demonstrate that their vehicles can operate safely in complex urban environments, respond appropriately to unexpected situations and comply with traffic rules. Authorities must also determine how responsibility should be allocated when accidents or service failures occur.

The proposed regulations do not mean that autonomous taxis will immediately become available throughout Shanghai. The draft establishes a policy direction, while the details of licensing, safety oversight and commercial operation will depend on the final rules and subsequent implementation.

Public consultation is an important stage in the legislative process. Authorities may revise the draft after receiving comments from businesses, industry associations, drivers, passengers and other stakeholders.

For Shanghai, the proposed overhaul represents an effort to adapt transportation regulation to technological change while addressing concerns about the commercial practices of digital platforms. The final outcome could provide an important reference for other Chinese cities considering how to regulate autonomous taxis and app-based transportation services.